Supply chain optimization

Select the best suppliers to increase business competitiveness

Supply chain optimization

Select the best suppliers to increase business competitiveness

Most of the costs of the company go to suppliers for the purchase of goods and services used in the transformation processes to realize finished products or services for customers.
Optimizing the supply chain means selecting suppliers to give greater weight to those that generate value for the company and reduce the number of those who absorb resources without providing extra contribution besides the product or service supplied.
This project aims to make more efficient the business transformation chain and to increase the competitiveness of the company.

In the information age, every company must build strong relationships with its customers and suppliers to strengthen its position in the marketplace.
Moreover, if the company's transformation process is increasingly extensive and complex, it is necessary to look beyond the company perimeter and optimise the supply chain.

This result can be achieved with the following activities:

  1. creation of a grid for the systematic evaluation of the suppliers performance
  2. financial analysis of the suppliers balance sheets
  3. scouting of new suppliers as a typical logistics activity

The first task is the collection of all data related to a single supplier of product or service. Each supply gets a mark so that the total score individually assigned to a supplier in a time frame divided by the number of the deliveries will express an average mark.
By ordering the scores of the various suppliers we will obtain an evaluation grid where the best performers rank at the top. These ones have good quality, keep the price aligned to the standard, comply with all order conditions such as delivery times, quantities ordered, unique lots, etc., agree to undergo an audit when required.
On the other side, the ones at the bottom lack all the aspects above and this suggests to replace them with others more suitable to cooperate with the company.

The financial statements of our suppliers are documents rich in information that is important to analyse to get knowledge of their financial structures and therefore evaluate their growth perspective over time.
Suppliers with weak capital structure and high debt could even grant attractive discounts, but their default risk could leave the company without supply if their business is suddenly closed.
Optimizing the supply chain allows us to timely understand if a good quality product supplier undergoes a difficult moment.
If the goal is to maintain the commercial relationship, financial support or another contractual agreement can be offered to this partner, allowing to overcome the temporary difficulty.

The third activity is a direct consequence of the two previous ones, because in order to replace a supplier it’s necessary a regular scouting to start new born relationships.
Such activities take different time according to the industrial sector.
In the pharmaceutical it can reach two years in total, due to the length of the regulatory and authorisation procedures of the supervisory bodies.
The other industrial sectors may have less complexity but in general it is difficult to spend less than twelve months if we consider the various activities listed here below as an example:

  1. select at least three potential suppliers;
  2. collect data and information to assess whether their technical capacity satisfies our operational needs;
  3. request a quote for the product or service of our interest;
  4. involve the internal functions that participate in the processes affected by the change in order to have their general consent on the supplier who sent the best offer;
  5. activate the quality control function to audit the new supplier;
  6. write the supply contract that will be signed by the legal representatives in the final version.

The aforementioned term, which may be shortened should it be required, is closely linked to the resources that can be dedicated to this strategic and useful activity.

Promo offer to optimise the supply chain

Advantages of this project:

  1. Make the operational processes efficient with the rationalisation of the suppliers pool by selecting the best and better integrated in the business transformation chain;
  2. Strengthen the relationship with strategic suppliers, and, should we find among them one in temporary financial difficulty offer a technical support;
  3. Risk reduction inherent in the selection process;
  4. Remove any non-compliance such as the absence of the contract in the supplier file.

Small Enterprise

For a small enterprise, a supply chain optimisation project can be done with a total cost of € 3,300 divided into two phases for twelve consulting days:

3,300

  • € 500 token for four half days of consultancy to evaluate if go ahead with phase two and continue the project with indication of the working areas
  • Development of the project with ten days of consultancy.

To be cost effective it’s better to do the work in remote, otherwise the travel expenses duly documented will be added to the costs indicated above.

Requesting information

Medium-sized Enterprise

For a medium-sized enterprise, a supply chain optimisation project can be done with a total cost of € 4,700 divided into two phases for seventeen consulting days:

4,700

  • € 500 € token for four half days of consultancy to evaluate if go ahead with phase two and continue the project with indication of the working areas
  • Development of the project with fifteen days of consultancy.

To be cost effective it’s better to do the work in remote, otherwise the travel expenses duly documented will be added to the costs indicated above.

Requesting information

Non-disclosure agreement

Kenning Consulting undertakes to sign a non-disclosure agreement to protect the confidentiality of the company’s data and informations of which it will come to know during the consultancy.

Find out more about our projects for management improvement and you will see they can be useful for your company!